Project Management Institute

Lean into Savings

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SPECIAL REPORT

Using lean principles can drive waste and inefficiencies out of programs—and save millions in the process.

BY SARAH FISTER GALE

ILLUSTRATIONS
BY NEIL WEBB

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“Application of lean enablers is designed to reduce and/or eliminate waste. The program manager can use the challenges and enablers to develop the program plan, and help identify and mitigate risks.”

—Josef Oehmen, PhD, MIT Sociotechnical Systems Research Center, Cambridge, Massachusetts, USA

LEAN PRACTICES have been working miracles in manufacturing for decades, driving early adopters—most notably Toyota—to the top of their markets. Given that track record, lean processes are now cropping up in project management across industries.

Organizations that apply lean principles to their program management practices are able to identify and weed out processes and activities that introduce wasteful spending. In a world of big-budget programs, such improvements can yield huge bottom-line benefits.

“Applying lean principles to program management drives greater efficiencies and value to the customer and the organization,” says Kambiz Moghaddam, Ed.D., program lean execution leader for Boeing Defense, Space & Security, Long Beach, California, USA. “It's about identifying opportunities and execution, which results in improving the quality, productivity and efficiency.”

The Guide to Lean Enablers for Managing Engineering Programs, released in 2012 by PMI, the International Council on Systems Engineering (INCOSE) and the Massachusetts Institute of Technology (MIT), outlined key challenges programs face and offered up approximately 300 best practices in 40 categories that effective teams and organizations use to overcome these issues.

“Application of lean enablers is designed to reduce and/or eliminate waste,” says Josef Oehmen, PhD, the study's leader and a research scientist at the MIT Sociotechnical Systems Research Center, Cambridge, Massachusetts, USA. “The program manager can use the challenges and enablers to develop the program plan, and help identify and mitigate risks.”

Since its launch, the lean enablers study has been lauded in program management communities. It also won the prestigious Shingo Research and Professional Publication Award from the not-for-profit group Shingo Prize for Operational Excellence at Utah State University.

Understanding how lean enablers work together allows project and program leaders to increase their impact and push their organizations to operate as efficiently and effectively as possible.

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Employees at the Toyota Motor Corporation's Takaoka Plant in Toyota, Aichi Prefecture, Japan

“High-performing organizations use 60 percent to 70 percent of these lean enablers,” Dr. Oehmen says. These include proactively managing and coordinating stakeholders, defining clear roles and responsibilities, using value-driven decision-making, and creating a culture of respect.

Darline Georges Giraud, project manager consultant for Alten SA, Paris, France, has found that using lean enablers with clients helps align project management methodologies with lean business practices.

“One of the primary challenges faced by project management offices (PMOs) is providing a clear road map that communicates common understanding of the implementation of the lean framework outside of manufacturing,” she says. “These enablers do just that by providing implementation suggestions that can be customized to the objectives of the PMO, thereby facilitating the organization in moving its business units from a traditional to a lean culture.”

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“[Lean] enablers…[provide] implementation suggestions that can be customized to the objectives of the PMO, thereby facilitating the organization in moving its business units from a traditional to a lean culture.”

—Darline Georges Giraud, Alten SA, Paris, France

ROOM FOR IMPROVEMENT

Whether a project team is designing a new IT system, building a mine or creating a smart city, large-scale engineering programs are among the most difficult and risky undertakings an organization can attempt, says Dr. Oehmen. “They not only push the envelope of what is possible, but define a new envelope.”

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“Studies show that critical activities are idling on programs upwards of 65 percent of the time. And even within the activities being executed, there is up to 60 percent waste.”

—Josef Oehmen, PhD

Even organizations with high program management maturity can waste a tremendous amount of resources on these initiatives due to poor planning, lack of communication and delivery inefficiencies.

Consider this: The U.S. Department of Defense's 96 largest engineering programs saw an accumulated cost overrun of nearly US$300 billion and an average schedule overrun of close to two years, according to the guide.

Alarmingly, this level of waste is not uncommon on major defense programs, says Bohdan Oppenheim, PhD, professor of systems engineering at Loyola Marymount University, Los Angeles, California, USA, and an author of the study. Programs are rife with inefficiencies stemming from poorly managed acquisitions systems, a lack of clear roles and the practice of selecting contractors before program requirements are properly prepared. “Such programs tend to be unmanageable,” he argues.

The defense industry is not alone in its inefficient program management results. “Studies show that critical activities are idling on programs upwards of 65 percent of the time,” Dr. Oehmen says. “And even within the activities being executed, there is up to 60 percent waste.”

By taking a lean approach to program planning, stakeholder management and project implementation, much of this waste can be eliminated, says Eric Norman, PMP, PgMP, managing partner at Norman & Norman Consulting, Atlanta, Georgia, USA. “A lot of organizations use lean tools at the staff level, but they are rarely incorporated into project and program leadership and governance practice,” he says. “That's where there are huge opportunities.”

Lean enablers can be mapped to specific metrics, which helps teams validate their choices and defend their projects, Ms. Giraud adds. “Adoption of lean enablers provides support to management's decision by providing clear data to ensure that the most critical and strategic programs are delivered according to expectations.”

PEOPLE FIRST

Respect for people and culture is another key theme in the guide and is considered the most critical enabler by many participants, including Prasanna Chilukamarri, industrial systems engineer for storage-solutions supplier Warehouse One Incorporated, Kansas City, Missouri, USA. “All change takes time, and you have to show your respect for people if you want them to move with you,” he says.

From the start of every project or program, he keeps team respect front and center by listening to feedback from team members and customers about what works and what drives delays into the process. Only then does Mr. Chilukamarri make suggestions for improvements.

“Before you can talk about changing what you do, you need to listen to concerns about how things are being done,” he says. “Teamwork plays a big role in making lean work.”

Mr. Moghaddam is similarly dependent on people-driven lean enablers. “The key success factors in implementing lean have been based on the integration of people as the most valuable component,” he says.

When he's put in charge of a new large-scale project or program, Mr. Moghaddam helps establish the annual goals and targets and then assigns specific lean-driven goals to managers within key areas of the program. “I work directly with engineering managers and their teams to identify opportunities to implement projects more cost effectively and efficiently,” he says. “That might mean streamlining a process or providing improved engineering tools to help end users do their jobs more efficiently. The focus on lean applications not only applies to the engineering and production areas, but across all functions within the program.”

Mr. Moghaddam also focuses heavily on communication as a lean enabler. “Communication is the most critical part of every program charter at Boeing,” he says. At the start of each program or project, program or project managers meet with all stakeholders to establish communication expectations—who should receive updates, how often teams need to meet and how they should share key program information.

“As the program execution lead, I take a lean communication approach: I focus on eliminating nonproductive meetings while reducing the frequency and duration of other meetings, so we're making the best use of our time,” he says. More focused and efficient meetings also reduce potential misunderstandings around scope, cost and schedules. “Effective communication throughout the project life cycle results in more understanding and agreement, and it allows the team to identify and proactively mitigate associated risk in the early phases of the program.”

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CHALLENGES AND ENABLERS: A PRIMER

The PMI/INCOSE/MIT Guide to Lean Enablers for Managing Engineering Programs identified 10 common challenges or behaviors that drive waste and inefficiencies in engineering programs.

  • Reactive program execution
  • Unstable, unclear or incomplete requirements
  • Insufficient alignment and coordination of the extended enterprise
  • Locally optimized processes that aren't integrated across the enterprise
  • Unclear roles, responsibilities and accountability
  • Mismanagement of program culture, team competency and knowledge
  • Insufficient program planning
  • Improper metrics, metrics systems and key performance indicators
  • Lack of proactive program risk management
  • Poor program acquisition and contracting practices

The report also examined how six key principles of lean could limit the impact of these challenges.

  • Build a program culture that respects people.
  • Capture the value defined by the key customer stakeholders.
  • Map the value stream and eliminate waste.
  • Flow the work through planned and streamlined processes.
  • Let customer stakeholders pull value.
  • Pursue perfection in all processes.
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“A lot of organizations use lean tools at the staff level, but they are rarely incorporated into project and program leadership and governance practice. That's where there are huge opportunities.”

—Eric Norman, PMP, PgMP, Norman & Norman Consulting, Atlanta, Georgia, USA

A culture of strong communication can also make it easier to suggest waste-reducing changes. Whether it's reorganizing schedules to lessen conflict among teams or changing the layout of a production site to shorten the hand-off time between steps, the key is looking at the system with lean principles in mind, according to Mr. Chilukamarri. “You can reduce a lot of waste by eliminating staging areas and hand-off steps,” he says.

HOW TO BE LEAN

Incorporating lean initiatives and practices into a program management process is a daunting task that can't be completed overnight. “There's no silver bullet,” says Dr. Oehmen. Instead, organizations should review the lean enablers report and then examine their own processes to see where changes can be made.

“You need to ensure you understand how each lean initiative fits into the corporate framework, what synergies exist between initiatives, and the desired result of each initiative individually and holistically,” says Viq Pervaaz, chief project officer and senior vice president for Aon, New York, New York, USA.

He encourages companies to start at the beginning: Many challenges in program management stem from a lack of clear, stable processes and specifications and, of equal importance, ensuring the organization understands them, he says. Defining, measuring and communicating program goals and how they will be achieved from the start—and then on a routine basis—can reduce the likelihood of bottlenecks, gaps and rework.

CASE STUDY

ROCKWELL COLLINS LEAPS INTO LEAN

At aviation manufacturer Rockwell Collins, one team has proven that when organizations apply lean enablers at the outset of the planning process, they can drive substantial savings across the life cycle of a program.

“We are specifically interested in the lean enablers that support value-added activities,” says Brett Stephenson, principal program manager at Rockwell, Cedar Rapids, Iowa, USA. “And we involved lean experts from the beginning to help us plan.”

FILL IT UP

In June 2011, Rockwell Collins signed a contract with Boeing to provide a range of advanced avionics and mission equipment for KC-46 aerial refueling tankers being built for the U.S. Air Force. A key part of the project is the development of a state-of-the-art remote-visioning system that uses technology to guide refueling capabilities during midair operations. “The tanker is like a giant gas station in the sky used to refuel other aircraft,” says Mr. Stephenson, who is managing the new product activities of all hardware products on the program.

Currently, refueling operations are conducted by a boom operator laying in the back of the aircraft and flying the air-refueling boom by watching it through a small window. With the new system currently being developed by the Rockwell Collins team, the operator will guide the boom using a computer screen that offers a view of the boom and the other aircraft.

“It's going to be a cutting-edge capability for this tanker and just one subset of the program,” Mr. Stephenson says. Rockwell Collins is also providing the flight deck, aircraft networks, surveillance and air-traffic management equipment, and communications and navigation gear.

TIMING IS EVERYTHING

To ensure the program went smoothly, Mr. Stephenson's team relied on Rockwell Collins's lean engineering accelerated planning (LEAP) team, an internal group dedicated to helping project teams apply lean principles to program planning, explains Deb Secor, LEAP's principal project manager. “LEAP helps project and program managers focus on the dependencies between tasks,” she explains. “By helping team members understand how their actions impact the preceding and following tasks, they are able to make more efficient choices.”

The LEAP team got involved early on in the KC-46 program, when Mr. Stephenson invited the group to moderate a kickoff meeting with all key stakeholders across the life cycle of the program, including engineers, program mangers and factory teams. Because some of the biggest challenges occur during the transition to manufacturing, he wanted to bring everyone together as early as possible—before critical decisions were locked down.

Together they created a 13-foot (4-meter) value stream map that laid out every task and decision leading up to the transition, along with deadlines and exit criteria.

This step helped ensure nothing was missed, he says. “What's key to the customer is usually evident early on, but there are many decisions that are important for operations and testing that may not be as evident.”

For example, in the meeting team members identified the need to mandate standardized screws so the manufacturing line wouldn't have to change out tools, and they specified specific circuit-board test pads that would give test engineers the most coverage. They also ran all the selected materials through a customized procurement software tool that assesses each component against Rockwell Collins's list of preferred vendors and products.

“The tool flags any component not on the preferred list and suggests an alternative,” Mr. Stephenson says.

This is especially useful because designers may choose materials for certain characteristics without considering the cost of manufacturing implications. “They may be indifferent between component A or component B, but we can achieve significant savings by selecting materials from preferred partners,” he says.

Once they mapped out the steps, Mr. Stephenson's team set deadlines for each task and decision. “The secret sauce is knowing when decisions need to be made in order for engineers to incorporate them into their designs,” he says.

For example, if design engineering, test engineering and operations plans are not concurrently executed, minor updates, such as adding a test point or changing to a preferred part, could drive rework or requalification. These forms of waste can be avoided through simulation, 3D modeling and including critical stakeholders in design reviews, Mr. Stephenson says.

In the end, value-stream mapping took only six hours, but it resulted in measurable savings across the program. “In the beginning people worried, ‘How can we afford to put all these resources into lean planning?’” he says. “But I was able to show that it doesn't take a lot of resources to get results.”

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“You need to ensure you understand how each lean initiative fits into the corporate framework, what synergies exist between initiatives, and the desired result of each initiative individually and holistically.”

—Viq Pervaaz, Aon, New York, New York, USA

The most effective lean programs communicate the principles holistically across multiple teams, projects and departments, because every change has consequences that should be deliberately recognized. “You can't do lean in a silo, and program management plays a pivotal role in ensuring efficiencies are leveraged across the organization,” Mr. Pervaaz says. “For example, if you adopt lean techniques to reduce product manufacturing cycle time, you need to think about how that will impact communications, sales and finance teams.”

Taking that holistic view translates the benefits of lean across the program and, in fact, across the organization—and reduces the risk of future bottlenecks.

Still, adopting lean enablers isn't an all-or-nothing proposition, says Ms. Giraud. “The biggest challenge is selecting the right enablers that will add the most value.”

Organizations shouldn't be overwhelmed by the sheer number of the enabler options, adds Dr. Oppenheim. “The biggest transformation journey starts with a single step. Applying even one lean enabler can make a difference.”

He encourages program managers to review all the enablers, select two or three that could help them meet their biggest needs and make them formal practices in their program management process. As those enablers drive results, they will demonstrate the value of lean to the program team and leadership, making it easier to earn buy-in for adopting more enablers in the future.

“Your approach has to be based on a thorough understanding of the organization,” he adds. Lean doesn't replace good thinking; it enhances it. PM

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Want to learn more about lean enablers? Read the full guide at PMI.org -> Business Solutions -> Project Management Drives Value.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK JULY 2013 WWW.PMI.ORG

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